The Board of Directors of the Texas Windstorm Insurance Association voted Friday to rescind a controversial proposal to increase residential and commercial insurance rates approved last year.
The agency announced the unanimous vote in a five-paragraph statement on the its website on Friday.
“Texas Windstorm Insurance Association policyholders will not be impacted by a premium rate increase in 2019,” the statement said.
The board of directors in August 2018 voted to increase windstorm insurance rates by 10 percent. If the increase had been approved, it would have been the eighth increase in wind insurance premium rates in 10 years, and the steepest rate increase since 2009, just after Hurricane Ike in 2008.
The board voted for the rate hike amid assertions that the association’s funding had been depleted by claims filed after Hurricane Harvey in 2017. The windstorm association received more than 75,000 Harvey-related claims, for which it paid a little more than $1 billion, according to the association.
The association is the windstorm insurer of last resort for property owners on the Texas Gulf Coast. The legislature created the association in 1971 to provide insurance to property owners who private companies refused to cover. The association manages more than 200,000 insurance policies in 14 coastal counties.
Texas Gov. Greg Abbott blocked the increase in October, saying the association should at least wait until after the legislative session to give lawmakers time to consider windstorm insurance reform bills.
The session officially ends on Monday.
It was unclear whether any one piece of legislation caused the board to reverse its decision on the rates. The association did not respond to a request for comment on Friday afternoon, and video of the board’s meeting, which took place in Austin, had not yet been posted on the association’s website.
The Texas Senate approved a bill May 21 revising some of the association’s operations. Among other things, the bill creates a process for people to automatically renew their windstorm policies and changes the way the association determines replacement costs for damaged properties.
Critics of the bill said it did not go far enough in addressing central policy issues about the association’s structure, according to an analysis by the Texas House Research Organization.
A different bill, which was approved by the Texas House of Representatives, but did not make it through the Senate, would have extended Abbott’s moratorium on rate increases until 2021.
The rate freeze bill passed the House by a vote of 132-10. Its author, state Rep. Todd Hunter, told the Corpus Christi Business News that vote sent a clear signal to the association’s board.
The board’s decision was lauded by critics of the rate increases who argued they would harm coastal residents and governments.
Henry Freudenburg, chairman of the Coastal Windstorm Insurance Coalition, a consumer advocacy group, said there was still work to do to reform the association.
He said he expected the legislature to call for a study to find ways to reform the association and come up with recommendations to change it ahead of the 2021 legislative session.
“You can’t do that during the session, it’s just too much,” he said. “We’re very, very confident that TWIA, from this day forward, will become a profitable entity.”
The association’s board is scheduled to meet next in Galveston in August.